The Kentuckian

Safeguard good government, outlaw corruption

Edited by Anna Keller; based on Yves Smith's Skunk Party platform

5 December 2024

A government that fails to protect the people from widespread predatory practices fails as a government. If it systematically enables or assists routinely predatory entities, the system that enables the government to betray the public's trust must be replaced. The following policies will stop our government's most egregious corruption.

  1. Treat corporate welfare queens like government enterprises.

    a. Companies whose profits depend significantly or entirely on government subsidies are not private enterprises. They must be held to higher standards of accountability to the society that subsidizes them than businesses that make their own way.

    b. Existing state agencies and an existing federal agency will determine companies' accountability with a dependency ratio that measures how much of their pre-tax profits are government subsidies. (Which agencies? OGA? FTC? IRS? State Auditor?)

    c. Big financial services companies like big banks depend on the interbank payments system, Fedwire, which isn't viable without Fed backstopping. FDIC insurance is underpriced, so is a subsidy. Over 90% of mortgages originated in the US are government guaranteed. Big financial services companies could not exist in their current form if government props were removed. Regulate them like public utilities. (Is it still true that "Over 90% of mortgages originated in the US are government guaranteed?" It was true in 2011.)

    d. Big Pharma depends on government funding for research and development. Military contractors empty the public treasury like no other industry. Extractive industries operate on public lands. Multinationals generally pay no property tax on headquarters, nor do profitable "non-profit" medical centers that heavily use city services they don't pay for and occupy valuable urban real estate tax-free.

    e. Walmart, McDonald's, and other national retail businesses pay workers less than a living wage. Underpayment costs taxpayers---employees have to use food stamps, Medicare, and other social safety nets. To calculate what these businesses take from the national treasury, total the difference between wages paid vs living wages with state and local tax breaks for building new stores in particular locations. ((1) What's a living wage? (2) Should we highlight other retail practices? Or government EV credits Tesla depends on? How has the structure of subidies changed since 2011? Who are the least-private companies now?)

    f. Companies who get more than 10% of their pre-tax profits from subsidies shall have labor and community representatives as board members. (Who will set dependency ratio obligation rules? What challenges would they face? What's the enforcement mechanism? How much will enforcement cost? Can any dependency ratio obligation rules be set and enforced by state or municipal governments?)

    g. A company that gets more than 20% of its pre-tax profits from government subsidies will cap compensation to employees and board members at 50 times the full-time equivalent of lowest worker pay, including contractors. Deferred compensation and stock options are compensation.

    h. Companies over the 20% subsidy level will cut manager and executive pay and benefits in the same proportion as cuts imposed on low-level workers. These companies would be prohibited from increasing manager or executive pay in any year during or immediately after a headcount reduction.

    i. Docking executive pay, particularly in large firms, because they are unduly on the taxpayer dime will make them change operations and rely less on public support.

  2. No more looting.

    a. When companies that enjoy government support borrow too much money, take a lot of risk, pay executives and insiders too much, and go bankrupt, they're looting. "Treat welfare queens like government enterprises" will stop a lot of looting. (Should I highlight PE roll-ups? Or hedge fund destruction of Kentucky pensions?)

    b. Looting depends on enablers, like compliant accountants and lawyers and weak boards. Aggressively prosecute predatory executives and employees. Outside advisors who provide a liability shield must also be prosecuted. Under current law, the only party that can sue outside advisors that provided information to mislead investors or other parties is the client of those advisors---probably the shady company itself. (Is it still true that "the only party that can sue outside advisors that provided information to mislead investors or other parties is the client of those advisors?" Where can we find this law?)

    c. Disbar partners in foreclosure mills. Compliant judges also abuse the legal process in foreclosure cases. A simple remedy in New York's courts requires attorneys to certify the validity of documents submitted to them. This stands in sharp contrast to bank-friendly behavior in the rest of the country, including Kentucky. (Is the NY law requiring attorney certification of document validity still on the books? What's the chapter and verse? Is it still exclusive to NY?)

    d. Privatization or reckless use of public resources is looting. Big Pharma creatively extends drug patents through inconsequential changes, like reformulation for 24 hours dosage or validaton of additional uses. Publicly conferred communication monopolies and oligopolies price-gouge. American broadband services are as a result low in quality and high in cost relative to advanced and even developing economies. Irresponsible use of scarce resources destroys potable water and increases the occurrence of floods and fire. Public resources must be managed with the public first in mind. (Is this the place to go after road construction and maintainence vertical monopolies like The Allen Company? Or Class I railroads destroying infrastructure and cutting service because they're heavily financialized and trying to get out of their capital-intensive business and bank on their brands?)

    e. It isn't looting to own a Thoroughbred or breed a new plant variety and profit from its output, such as race winnings or progeny (stud fees, sales of new seeds), but using GMO technology to privatize agricultural commons is looting. GMOs must at least be labeled. Private companies shall no longer take and hold choke points on resources as critical to the public as grains and other agricultural staples.

  3. Pay for clean government.

    a. The result of undercompensating government employees in critical positions is bad government. The reason we have corrupt government is we don't pay for better.

    b. If you pay police terribly, cops take bribes. If you pay members of Congress or regulators far less than first-year law school graduates in large New York or DC law firms, members and regulators take bribes. If you cut health care subsidies for Congressional staff, lobbyists write the laws. Corruption flourishes where the public sector is radically unequal compared to the private sector.

    c. People in key positions in Washington and Frankfort need meaningfully higher pay. The people at the very top, such as the heads of regulatory agencies, and enforcement and compliance chiefs, need to be paid at the level of high-caliber private sector professionals, such as law or accounting firm partners.

    d. Staff in important roles---deputies in regulatory agencies, Congressional staffers---need to be paid enough to enjoy a comfortable middle class lifestyle in a viable career. Then curbs are needed on post-government work, like a prohibition on taking a job where one trades on their government Rolodex in any meaningful manner for five years after leaving government service.

    e. Make it unlawful for members of Congress to accept campaign contributions from entities that fall within the jurisdiction of their committees. Just as a judge who gets political contributions from a litigant must be removed from the case, lawmakers who determine tax, regulate banks and insurers, and decide how to spend the government's money should not be bribed.

    f. The government needs much tougher internal audit functions. Inspectors General units vary tremendously in vigor across the Executive branch, but even the more aggressive ones aren't terribly tough. Either reform the Inspector General function to make it more bloody-minded or replace it with a better set of watchmen.

  4. Make government intercede when the private sector fails.

    a. Businesses promised deregulation would raise incomes and increase growth. The growth has been in top executive incomes, profit share of GDP, price-gouging and inflation, and lost jobs.

    b. The private sector has been abjectly failing to do its duty. During economic expansion they save rather than investing. After recessions, large companies borrow boatloads of cash, and either sit on it (which in many cases means speculating in their corporate Treasuries) or buying back stock to inflate their share price. Many industrial companies now run their Treasuries as profit centers. Small companies are shell shocked by inflation. Most report no interest in spending. ((1) We should explicitly state the private sector's duty. What is Yves implying that duty is? (2) Are small companies still not spending?)

    c. Until the private sector is willing to do its job, government needs to intercede. Tax companies aggressively on cash holdings to discourage hoarding and encourage investment. A financial turnover tax will discourage major corporations from keeping funds stashed for the purpose of speculation. (Again, what do we assert is the private sector's job?)

    d. Our bad infrastructure makes for a good jobs program. Reinstitute revenue sharing, first implemented by Richard Nixon. The Federal government will give grants to the states, based on the premise that the national government is more efficient at tax collection but state and local governments are the better judge of priorities in their area. State and local governments are hit hard in recessions. Revenue sharing is the fastest, most straightforward way to fix infrastructure, decrease service inflation, and increase good-paying jobs. (How much would revenue-sharing contribute to state or municipal corruption money-holes? Many Kentuckians might see this as a handout to those Louisville gangsters. Can we get affordable Amtrak-run intercity passenger lines from Cincinnati to Atlanta and from Louisville to Nashville on existing trackage with this pot of money?)

  5. Guarantee the right to offline life.

    a. Enforce a right to protection against abusive data collection and processing by the state and private sector---including for mass surveillance, marketing, and to train large language models. This right will include the right to security against crime in the digital realm, to an offline life, and to be forgotten online.

    b. Impose a "big data" tax on information communications providers and information gatherers like credit bureaus. Any transmission of data to a third party will be taxed, including vital data such as social security number, biometric data, and medical data and incidental data such as location, speed, blood sugar, and browsing and purchase history. This will be a "one-vendor" rule---a third party on Amazon's ecommerce site will pay tax on customer-specific information obtained from Amazon. Stolen data will be taxed as if sold to discourage cutting corners on security.

    c. Guarantee people a right to repair and resell what they legally own. Owners will be able to easily prevent third parties from remotely disabling their inkjet printer, car, tractor, or other property.

    d. The state should not impose digital relationships on Kentuckians. Ensure that social benefits never require facial recognition, iris or palm scans, or other biometric identification. Entirely defund the NSA in its current form. Any new authorization will be for narrowly-defined defensive programs, for example against ransomware attacks. Cash will universally remain legal tender for settling payment from parking meters to restaurants. Ensure access to human employees, located in Kentucky, for vital records, police matters, licensure, benefits, and disaster recovery.

This article, like all original content in The Kentuckian, is released into the public domain. The Kentuckian is an independent publication. It doesn't represent the opinion of the Kentucky Party or any of its committees.